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Buffett regrets M&A shortage in Berkshire letter



(Reuters) – On Saturday, Warren Buffett turned out to be the wrong president Donald Trump to take too much credit for the nation's economic growth while acknowledging that the market conditions make it difficult for his Berkshire Hathaway Inc. to find more large corporations to buy.

Mr. Buffett regretted these permissions in his much-read annual letter to the Berkshire shareholders.

The accompanying letter was more bad news, falling stock prices and a large write-down for the company's Kraft Heinz Co. investment drove $ 25.39 billion quarterly loss and prompted Berkshire to put its lowest annual profit since 2001.

But many of Berkshire's more than 90 companies, such as the Geico auto insurance company and the BNSF railway, worked well and quarterly operating profit increased 71

%.

Mr. Buffett uses its stock letters to focus on Berkshire's operations, strengthen the strength of the US economy and criticize thinking and business practices that come in the way.

The 88-year-old said that Berkshire's success was partly a product of "the American swing wind" that has enabled the country to enjoy "almost incredible prosperity".

He said that since he began investing in 1942, prosperity has been monitored by seven Republican and seven democratic presidents through wartime and

Mr. Trump often takes credit for optimistic news about the economy and the stock market, sometimes linking to his economic policies.

Mr. Buffett, who supported Democrats Hillary Clinton in her 2016 White House run, said no one should claim credit when it goes well.

"It is beyond arrogance for American companies or individuals to boast that they have" made it alone "Mr Buffett wrote.

Mr. Buffett also made a possible oblique criticism of Trump's boast of US economic performance, including in relation to other countries such as China, where Berkshire invests in electric car manufacturers BYD Co.

The United States, according to Mr Buffett, would "rejoice" when other countries have bright futures. "" The Americans will be both more prosperous and safer if all nations thrive, "he wrote." In Berkshire, we hope to investing significant sums across borders. "

The White House was not immediately available for comment. Berkshire did not immediately respond to a request for comment.

Thomas Russo, a partner at Gardner Russo & Gardner in Lancaster, Pennsylvania, and the long-standing The Berkshire investor said, "It sent an exceptionally strong message on how open markets and free trade stop helping all participants do better. "

Looking for elephants

Part of the reason Mr Buffett may want to invest overseas is that he is struggling to find large investments at home and does not expect to change soon.

Berkshire has not made a big acquisition since he paid $ 32.1 billion to Precision Castparts of aircraft parts manufacturers in January 2016.

Mr. Buffett said the near future prospects for more acquisitions were "not good" because prices are "high" for companies that had decent long-term prospects.

While Mr. Buffett said the idea of ​​an "elephant size" acquisition gets its heart beat faster, the "disappointing reality" was that Berkshire would probably use some of its $ 111.9 billion in cash to buy more shares

Berkshire ended 2018 with 172.88 billion shares, but many of these suffered double-digit price declines in the quarter , including a 30% slider in its largest holding, iPhone manufacturer Apple Inc.

These reductions were an important factor in Berkshire's major quarterly loss and its 91% year-on-year revenue decline to $ 4.02 billion from $ 44.94 billion the year before, as it benefited from a lower corporate tax rate.

The accounting rules require Berkshire to report unrealized share gains and losses with net profits, resulting in large quarterly fluctuations that Mr Buffett says are usually meaningless.

Operating profit for the quarter amounted to $ 5.72 billion, or $ 3,484 per class A share, top analyst forecasts, and for the year, 71% increased to $ 24.78 billion.

Operational companies are overseen by Vice-President Greg Abel and Ajit Jain, releasing Mr Buffett and Vice-President Charlie Munger, 95, to focus on capital allocation.

The result was also damaged by a write-down of $ 3.02 billion for intangible assets that Mr. Buffett said "almost entirely" attributable to Kraft Heinz, where Berkshire owns a 26.7% stake.

The packaged food company on Thursday shocked investors when it reported a $ 15.4 billion write-down for Kraft, Oscar Mayer and other assets, lowered the dividend, and said the US Securities and Exchange Commission reviewed its accounting policies.

During dated Saturday, Buffetts shareholders are well-timed and did not discuss Kraft Heinz travails or the daily management of that company by 3G Capital, the Brazilian company and Buffett business partners.

Berkshire bought back about $ 418 million of its stock in the quarter. It has recovered some losses on its shareholdings this year, but Standard & Poor's 500 remains 4% below that at the end of September.

                    


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